The present invention relates to the preparation and filing of tax returns using online and desktop tax preparation and planning software.
At present, many businesses track and manage their finances using financial accounting software. A typical user of a financial accounting software would enter on a daily basis financial transactions associated with the day-to-day operation of the business. When a user enters a financial transaction, it is recorded under an account category. Exemplary account categories are “accounts receivable”, “accounts payable”, “office expense”, and “rent.” By entering all of the financial transactions, a business owner or an individual can quickly obtain an accurate picture of the business finances. Various financial accounting applications are available that offer a variety of reports, such as a Profit and Loss Statement and a Balance Sheet Statement, which can be used for analyzing the current financial condition of the business.
It has become commonplace for taxpayers to use online or desktop tax planning software to prepare and file a tax return with the taxing authority, such as the Internal Revenue Service (IRS) in the United States, or other various national, state and local governments throughout the world. Data is obtained from the taxpayer herself through a direct user input. The interview process solicits data from the taxpayer by inquiring about the taxpayer's tax-related information. The tax preparation software also enables importing tax data from a variety of import sources, such as financial institutions, financial accounting applications, and other sources.
The interview process asks a taxpayer whether the taxpayer maintains his financial records in the financial accounting software. If the taxpayer responds affirmatively, she is asked whether she would like to import tax-related data from the financial accounting software directly into the tax return. The tax preparation software may initiate the import of the tax-related data from the financial accounting software per taxpayer's request or the taxpayer can choose to initiate the import process directly. The tax preparation software generates an accounting screen that allows the taxpayer to preview the tax-related data prior to the actual import. The taxpayer is asked to review or verify the data that will be imported. The taxpayer, as the user of the financial accounting software, is accustomed to viewing financial data under familiar accounting categories and typically does not know how these data relate to the tax data that appear in the tax return. Thus, when a taxpayer is asked to preview the tax data summarized under tax-related designations (e.g., income, deductions, and business deductions) as they appear in the tax return, the taxpayer does not understand where the data came from. Hence, the taxpayer may begin to doubt the completeness and accuracy of the data import process.